Happy New Financial Year!
Well I expect all New Year's resolutions have been broken or forgotten by now, but it's not a bad time to take stock of your situation and financial circumstances. You never know, you could save yourself a centime or two in the process. Here are some of the things I think you should be looking at:
Have you made a French Will?
Ok, not the most cheerful thought to start with, but let's get it out of the way. Let's direct this bit at those of us who haven't. Don't kid yourself that you UK Will (you do have one of those, don't you?) will be much cop over here when you shuffle off your mortal coil. The only thing it's any use for is UK property. Your nearest and dearest are going to be able to cope much more easily if you take the trouble now to make a Will which follows French succession law. And it's cheap to do. If you want a basic, hand written Will, just pop along to your local notaire. If you want something a little more elaborate, get in touch with me and I'll put you on to an English Avocat who specialises in this field.
Are you "legal"?
It amazes me how many people still duck under the radar and pretend that they're not really here, when in fact they haven't been outside France in the past five years. Do they want to pay capital gains tax when they sell their houses? Do they enjoy claiming (illegally) on their EHIC card for every course of treatment or dentists visit? Do they really like shelling out 22€ every time they go to the doctor's surgery? Get real. Get legal.
Are you a tax donor?
Taxes come in all shapes and sizes, but there are only two types; those you have to pay, and those you choose to pay. A huge number of people effectively 'choose' to pay tax by default, by not taking simple steps to avoid it. Note the word 'avoid', not 'evade'. Avoidance is legal, healthy and rewarding; evasion is illegal, hazardous and rewarding only if you get away with it; punitive if you don't.
There are many small steps that you can take, and there are some giant leaps. A small step is taking the money out of your bank deposit account and putting it in a Livret A, thereby saving all the income tax and social charges on the interest. A giant leap is cashing in that offshore 'makes you feel important' Executive Investment Bond in Jersey and investing it in a French tax compliant product which will shelter it from income tax and social charges, potentially for your entire life. I wonder what that could be called. Did you know that that same product could save your children 20% in succession tax when you pass your investments on to them?
Are you a financial ostrich?
I don't really mind if you are, but I don't want people behaving like one when they're not. OK, 2007 and 2008 were terrible years for investments. Many people saw the value of the portfolios fall by frightening amounts, but markets are cyclical; what goes up can come down, but what goes down will probably come back up again. The worst thing you can do at the bottom of a cycle is bale out and stuff what's left under the mattress. People who do this are not really financial ostriches; they are more like financial dodos. Please don't be offended by this. I'm not being rude to anyone, I'm just encouraging you to face up to reality. There is no gain without risk. It is vital to analyse your own attitude to risk and to identify accurately your appetite for risk. Only then will you be able to invest with confidence. 2009 was a much better year. I'm delighted to say that I and some of my clients are invested in funds that have more than doubled in value over the pas twelve months. That type of growth can't last forever, but you've got to be on board to reap the benefit while it does last.
Now all of this might seem like a real bind, and far too much effort to bother with, but you could always get someone to do it for you. Maybe a financial adviser can be useful after all...
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